What is Wall Street playing with lately? In mid-January, a series of policy actions by the Trump administration were directly interpreted as a signal—that the economy is set to receive strong stimulus before the end of the year. From calls to cut interest rates, to restricting credit card interest rate caps, and various measures to boost growth, investment banks are all eyes and ears.

What does this series of moves really mean? The most straightforward interpretation is: cyclical stocks are about to take off. Raymond James's latest research report leaves no ambiguity—policy guidance combined with growth signals strongly suggest that the economic cycle recovery is almost certain. UBS is even more direct—this is an election-driven economic maneuver, with voters' top concerns—prices, mortgage rates, energy costs—being the core logic of the policies.

Cyclical assets such as industrials, raw materials, and non-essential consumer goods are collectively favored by institutions; defensive stocks, on the other hand, are being sidelined. Even the policy of Trump limiting credit card interest rates, which hits bank stocks, is seen by JPMorgan Chase as nothing to fear—it's a short-term pain, and an opportunity to buy bank stocks. Moreover, mild inflation easing provides room for economic stimulus.

However, some are hitting the brakes. The S&P 500 is approaching the 7000 mark, and BTIG warns that, historically, five times it has approached this milestone, four ended in a pullback. Should we be cautious about short-term volatility? The consensus among institutions is very clear—don't pay too much attention to the fluctuations. The logic of promoting growth plus corporate earnings support suggests that cyclical assets are likely to be the main players this round.